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Frugality

I will be the first to admit that I grew up in a fairly conservative Christian family. It wasn’t as extreme as some stories I’ve heard from my grandparents, but I never saw my parents drink alcohol until my oldest brother’s wedding ceremony and the radio always blared Christian music. None of these are bad things, but these few examples are great indicators of a more conservative spin on Christianity.

In fact, conservative Christianity often abides by several of these rules or behaviors, regardless of whether it is abstaining this or that, in an attempt to live a holy lifestyle. The idea is that as we live holy lifestyles, we can glorify God and be a great counter-example to the world. This is the whole city-on-a-hill mentality. Shine your light upon the darkness. While this can lead to some legalistic tendencies (similar to the Pharisees, which many people are quick to point out), there are many positive things, one of which is the frugal nature of conservative Christianity.

Why Conservatives are Frugal

Despite the criticism that conservative Christians get, there are many financial benefits of living a life free from many of certain behaviors. Here are several activities or items that some (not all) abstain from:

Movies – Believe it or not, many Christian families and churches forbade going to the movies. It was considered too secular. (In my opinion, they didn’t understand a proper balance between sacred and secular) However, despite my “progressive” (or contemporary) stance, this was a great way to save some bucks. Today, going to a movie can cost more than $30 with tax before food for just two people. I can’t imagine having a large family. By avoiding movies all-together, they can enjoy other forms of entertainment.

Alcohol – Alcohol is probably one of the most debated topics within conservative Christians. Because of the strict adherence to literal interpretations of the Bible, conservative Christians hardly know what to do with passages of Jesus turning water into Wine. I have heard some pastors trying to say that there is a different Greek word used for wine than grape juice and so forth. While it may seem absurd to some of you, the point that I am making is that it saves some serious dough. I just went to two weddings in the same month. One had an open bar and the other didn’t have any alcohol. I can only guess how much more one bride and groom spent than the other. The simple fact is that alcohol costs money. Plain and simple. By avoiding this altogether, you are freeing up your money for other purposes.

The point I wish to make is two-fold. First and foremost, conservative Christianity (even as it changes with time) gets a lot of criticism, but actually contributes towards a healthy financial situation as it protects people from overspending on unnecessary items. Secondly, everything is more complicated than we often make it appear. Regardless of my own beliefs, conservative Christianity often gets blamed for a lot of things wrong in the church without pointing out the positive things. And so, the next time you want to point the finger, try to challenge yourself by asking what are some of the positive things that it/they/he/she has/have to offer.

What other ways does conservative Christianity help people save money?

My friend who just finished seminary accepted a pastoral position at a church in Hawaii. (Talk about suffering for Jesus, right?) In moving there, the church will be paying to ship his truck there, so that he has a car while on the island. As any typical graduate student does throughout the course of their studies, he collected lots of stuff – mostly books, but also furniture, clothes, etc. While shipping his truck to Hawaii may sound like an easy way to take most of his possessions with him, it’s actually quite the opposite. He is only allowed to keep items in the truck that are bolted down. That means even his face plate for his after-market CD player has to come out.

Ultimately this means that he is getting rid of stuff. He just recently told me how he got rid of 3 boxes worth of books, in addition to lots of other clothes, etc. I started to think about how much stuff my wife and I have collected in the 3 years that we have been married. While we live in a 1 bedroom apartment, I can hardly believe how much stuff we have. How did this happen?!

Are Material Possessions Bad?

We often hear about consumerism or worldly possessions and how bad it is for us. I believe much of this conversation stems from a very basic truth:

You can’t take it with you!

This is the idea that when you die, all the stuff that you have collected over your life means absolutely nothing. Yes, that’s right, those baseball cards, your lucky underwear, your stainless steel appliances – it doesn’t mean anything when you pass.

Yet, this basic truth is often exaggerated…

Worldly possessions are bad. They are evil. Material possessions are false idols.

Or, my personal favorite:

Material possessions hurt your relationship with God.

Since when is a relationship with God and having stuff mutually exclusive? I guess I should be clear. I’m not talking about the level of the “Hoarders” T.V. show(s). I suspect that we all know that hoarding is a serious social illness of some sort (or at least that’s my suspicion without watching the show much). Instead, I am talking about the average person. Isn’t it possible that possessions are not all bad? Or even better, couldn’t it help us in our relationship with God?

Why Possessions Can Help our Faith

I ask this question of whether the stuff in our lives can be a good thing because of two reasons. I often like to tackle the common assumptions of the Christian faith, especially as it relates to finances. This is one of the reasons that I look at tithing differently than other Christian finances authors. The second reason that I ask this question is because of a significant change recently.

My wife and I recently invested in a portable dishwasher. There, I said it! Well, that may not sound like much, but if you know me, it is huge! I absolutely hate doing dishes. Because we are renting, our unit does not have a dishwasher. In our 3 years of married life, we have never had one. This means that we spend, at minimum 3 hours a week doing dishes. My wife’s in-laws were coming into town and I had two days of dishes piled up (prior to getting our dishwasher). I had to do all the dishes at once and it took me 2 hours! Wowzer!

As a result of buying our new dishwasher, things have drastically improved. It literally takes minutes instead of hours each week. I told my wife that it was the best investment ever! That’s how much our dishwasher means to us.

Does this mean that I am too reliant on this material item? Am I ruining my relationship with God because I enjoy the luxury of some of my STUFF?

I think it would be hard to find someone that would answer, “yes” to these questions. I think it is especially relevant when you consider the time saved. I have more time to spend on whatever I choose. Whether this is volunteering, praying, reading, etc. I believe this is a great example that material stuff cannot be equated with evilness. Stuff is not inherently bad.

A Proper Balance

I believe understanding that our possessions are not bad in and of themselves, but instead how we use them is very important. Understanding that we can utilize our STUFF to be a greater service to our community is an important thing. Yet, it doesn’t mean you should buy as many items as possible to free up more free time. There needs to be some balance.

There needs to be a balance between spending without concern for others and avoiding items all-together because of the belief that they are inherently bad. I can’t say where people should draw the line, but I believe it should be somewhere in the middle. One needs to consider the motives for buying stuff before anything.

Are you buying that because it will make you feel good? Do you absolutely NEED to have it? Why are you buying it?

These are all important questions to answer when thinking about how much stuff you have. When you consider that in addition to the great need in this world, you are on the right track.

Readers, where do you think is the balance? Should people sell all their possessions?

There are thousands and thousands of people out there living lives of quiet, screaming desperation who work long, hard hours, at jobs they hate, to enable them to buy things they don’t need to impress people they don’t like.

Alright, so this doesn’t have anything to do with personal finance or a Christian perspective on money. But I found it useful and thought some of you might, too. We’ve had a big problem with stinkbugs in our area lately. And after spending way too much time flushing them or sucking them up with the vacuum, Michelle and I were looking for an easy way to kill them and we found it. Here’s our secret weapon:

It’s just a spray bottle filled with some soapy water. I just put about 2 tablespoons of dish soap in the bottle and shook it up a bit. Some recipes online say to use a whole lot more than that, but I found this to be effective. No need to waste a whole bottle of dish soap on this. Then I went on a rampage killing every stinkbug in sight. It works surprisingly well for something so simple. You usually only need about three or four good, direct hits to kill the stinkbug.

Obviously, this has no residual effect and will not prevent future stinkbugs from entering your house. But it’s a convenient way to kill the varmints without touching them and getting the stink all over your fingers. (Even using a tissue or some toilet paper to grab them doesn’t keep the smell off.) After they’re dead, you can just vacuum them up or gather by hand. As a plus, you don’t have to worry about kids being around when you’re spraying it. Well, as long as you don’t spray them in the eyes…

Don’t believe it’s that easy? Here’s a short video of me killing a couple stinkbugs with the solution. I went a little overboard on spraying them because I was trying to get quick results for the video, but you can confidently spray them a few times and move on. They’ll die within a couple minutes.

I recently had a friend comment that renting is “throwing away money”. This is a common misconception because home ownership has been touted as the best path to building wealth and a great decision for everyone. But the truth is that renting isn’t really as bad as some would have you think. In fact, it can be the best choice for many people – it all depends on your situation.

But specifically, I want to look at the idea that paying rent is just throwing away money. The unspoken assumption in that idea is that once you buy a home you’re no longer throwing away money. This simply isn’t true. Here are five ways you throw away money when you buy a home.

1. Mortgage Interest

Assuming you get a mortgage when you buy a house, like most everybody does, you’re going to have mortgage payments to make. Part of those payments will go toward the principal (what you paid for the house minus your down payment) and part will go toward interest.

The part of your mortgage payment that goes toward interest is just as much “throwing away money” as rent payments are. It’s money you’ll never get back and does nothing to improve your net worth. And on an average 30 year mortgage, it’s going to take you about 16 years before you’re paying more toward your principal than you are toward interest.

Granted, this isn’t as big of an issue later in your mortgage and it doesn’t matter at all once it’s paid off. But don’t underestimate just how much money you’re going to be throwing away on mortgage interest – especially at the beginning.

2. Homeowner’s Insurance

Homeowner’s insurance can cost anywhere from about $600 a year to $1,200 a year or more. By comparison, my renter’s insurance policy costs about $110 per year and it’s some pretty good coverage. So you’re looking at an additional $500 to $1,100 or more in insurance premiums because you’re covering the entire value of the home. (Renter’s insurance is mostly just for liability and contents of the home.)

Part of the money that’s “thrown away” in rent goes toward the insurance coverage the landlord buys for the home. So make sure you take this into account when comparing the difference between renting and owning.

3. Property Taxes

Own a home? Be ready for your property taxes, which can be anywhere from 0.25% of the value of your home up to 3% or more. The national average was around 1% the last time I looked. So for a $150,000 to $200,000 home, you’re talking $1,500 to $2,000 a year in property taxes.

Renters don’t pay separate property taxes on the home they’re renting. Those taxes come out of the rent they pay, but renters never see a separate bill for property taxes owed.

And no, you can’t refuse to pay your property taxes. Do so and you can say goodbye to your home.

4. Home Maintenance and Repairs

As a homeowner, you’re completely responsible for all maintenance and repairs on your home. These costs are going to vary quite a bit based on each situation, but I’d say a reasonable estimate would be about 1-2% of your home’s value each year. So for our $150,000 to $200,000 home, we’re talking about another $1,500 to $4,000 a year in costs. Maybe you could get away with less, but you’re looking at a minimum of $500 to $1,000 per year.

Renters? Yeah, they don’t have to deal with these costs. They’re the responsibility of the landlord. And while you could have a landlord that doesn’t take care of the property, it’s pretty easy to move somewhere else. Which brings me to…

5. Higher Costs for Moving

Moving tends to be much more of a hassle for homeowners than renters. It can take some time to sell a home – time you may or may not have before you need to move or start paying on your next mortgage. On top of that, you’ve got costs associated with selling that come out of your final price (commissions, inspections, and sometimes closing costs if you’re in a real hurry). Some of these costs can be reduced by doing it yourself (for sell by owner) but then you’re looking at more time and effort on your part (and you’ll still want to get a real estate attorney).

Renters have it pretty easy here. Assuming you’re at the end of your lease, it’s no big deal to find another place and move. And if you’re not at the end of your lease, it’s probably going to cost you less to break the lease than it would cost a homeowner to sell their house.

Repeat after me: “Renting is not always throwing away money.”

It should be clear that there are plenty of ways to throw away money if you own a home – enough ways to make it worse than renting. That’s the case for me, at least, and that’s why I plan to rent for quite a while longer. I’d need a phenomenal deal to make buying a better choice than renting at this point. And it may be the case for you as well. The least you could do is take some time to play with a rent vs. buy calculator and see how the numbers work out for you.

I should add that I didn’t even discuss the fact that many people tend to overbuy when they become homeowners. And did I mention the desire to remodel, upgrade, paint, redecorate, landscape, and on and on and on? Home ownership isn’t quite the great financial asset many make it out to be.

Last week, I discussed the first concept behind the idea of Advent Conspiracy – Worship Fully. Today, we’re going to look at the second concept – Spend Less. Here’s the Advent Conspiracy video in case you missed it:

Spend Less

Once we begin to Worship Fully and make Jesus the most important part of the Christmas season, we’re free to Spend Less. Spending Less doesn’t mean you won’t buy any gifts this Christmas. You may eventually come to the point where you choose to no longer buy any gifts, but that’s not the idea behind Advent Conspiracy.

Americans spend an average of $450 billion ($450,000,000,000) a year on Christmas. How much of that goes to gifts that no one really wanted in the first place? How many times have you bought a gift simply out of obligation? How many times have you received a gift out of that same obligation? Doesn’t really add much meaning to your Christmas, does it?

Advent Conspiracy is asking people to consider buying just one less gift this year. Instead of buying that gift, make something or give your time instead. It sounds very insignificant, but the total effect is obvious if you think about what it would look like for everyone to choose to give presence instead of presents. If you need some ideas for gifts that don’t cost a lot of money, check out these resources:

Spending Less lets you focus on Jesus and finding special ways to tell others you care about them rather than just buying stuff. Giving presence or home-made gifts conveys more meaning and love to others than store-bought gifts or gift cards. And it frees you up to Give More and Love All – the last two concepts behind Advent Conspiracy.

So make the choice to Worship Fully this Christmas. Honor God – not Macy’s or Best Buy or Wal-mart. Then find ways you can Spend Less and do something special for at least one person.

Make sure you’re here next Tuesday for the third concept behind Advent Conspiracy – Give More. Sign up for free updates to Provident Planning if you don’t want to miss it!

Poverty has been on my mind for some time now. What is poverty? How do we measure it? How do you overcome it? How do you live in it? Each of these questions (and more) warrants a post or several posts of its own. But that last one is what I want to talk about today.

I’ve been wondering what it would look like if my wife, Michelle, and I had to live in poverty. What would we have to give up? What would we spend our money on? What would life look like living in poverty?

Defining Poverty

In this case, I’m going to define poverty according to the 2009 U.S. federal poverty level guidelines. For two people, the poverty level is $14,570/year. This level applies regardless of where you live in the U.S., which doesn’t make much sense to me since the cost of living varies so much by location. But perhaps the areas with a higher-than-average cost of living adjusts the poverty level guidelines for their assistance programs. That’s something I’ll have to look at in another post!

I could use a different measure for poverty – a global measure, for instance. But the disparity between the global poverty level guidelines and the U.S. poverty level guidelines is extreme. Based on a $2/day/person poverty guideline (World Bank threshold), we’d be looking at $1,460 or 1/10 of the income for the U.S. poverty level. I can tell you right now that would mean giving up everything except food. No shelter, no transportation, no clothing purchases – absolutely nothing but food…and not much of that.

So for this article, I’m going to use the federal guideline of $14,570/year which is pre-tax. I’m not going to include food stamps, federal/state health coverage, or tax refunds (namely, the Earned Income Credit). Some studies have shown that the poverty level income would be 30-40% higher if such benefits were included, but I’m going to stick to the $14,570 number for the sake of simplicity.

What Would Our Spending Look Like?

If our annual income were $14,570, our monthly income would be just over $1,214. Here’s what I think our monthly budget would look like. Some of these numbers are based on actual expenses now and some are based on what I estimated after making changes to our lifestyle. I’m assuming we keep our current jobs.

Category

Amount

Income

$1,214.17

Giving

$130.00

Saving

$106.70

State & Local Taxes

$39.46

Health Insurance

$76.93

Rent

$400.00

Renter’s Insurance

$11.08

Groceries

$150.00

Utilities

$120.00

Auto (Gas, Maint., & Ins.)

$130.00

Other (Household & Personal)

$50.00

Total Expenses

$1,214.17

What We’d Have to Give Up

So the next question is how would this differ from our current lifestyle? Well, first we’d have to move. We’d have to find a place for 2/3 of the rent we’re paying now, and it would need to be closer to Michelle’s job to cut down on gasoline costs. A different place would also likely cut down on our utilities. This would be a major change since we’d have to move away from our family, friends, and church but not very far – just far enough to make it inconvenient but doable. We’d also likely be living in someone’s basement or sharing a place with another family for rent that cheap.

We’d have to give up the excellent health insurance we have through Michelle’s work and buy a no-frills $10,000 deductible plan that doesn’t cover office visits or prescriptions. It would only cover serious catastrophes like cancer. In contrast, our current insurance has a very low deductible ($150/$300, I think?) and covers office visits and prescriptions for a low co-pay. We’d also be giving up our dental insurance, though I’m not sure that’s much of a deal anyway.

Speaking of insurance, we’d have to decrease the coverage on our auto insurance to the state minimum levels and increase the deductible on Michelle’s car to $2,500. We’d also have to think about selling my car but that wouldn’t be completely necessary. Decreasing the coverage limits could expose us to some serious risks if we were to have an accident – likely resulting in bankruptcy if it’s a major accident.

I don’t mind that we’d be paying less in taxes. But our giving would have to go down and that wouldn’t be so great. We’d have to make some tough choices there. All of our saving would most likely be short-term savings to cover the deductibles for our insurance policies.

We’d have to spend less on groceries but not much less than we currently spend. I don’t imagine there would be any problems there. We’d just have to limit our meat intake and replace it with beans instead and shop a little more carefully. Eating out would be out of the question. We’d also need to cut our household and personal spending in half.

Beyond that, we’d have no cell phones, no Internet connection, and no TV (that last one’s not any different from now, but I’m just saying). We wouldn’t be able to pay my student loans unless we gave up saving or giving (or some of both), but forbearance or an income dependent plan would be an option at that point. We’d have no money for entertainment or travel of any kind, and every dollar would need to be meticulously tracked and spent with care. As it is now, I don’t track what we spend our ATM withdrawals on completely so that would have to change.

So while it wouldn’t be easy or “fun” to live on this budget, it would be possible. But we’d have no chance of saving anything for retirement, buying a house if we wanted to do that, or doing anything that required money outside of this budget. (That means no more sewing or jewelry making for Michelle. My hobbies don’t really require any money right now I think.)

Living Off Uncle Sam (or You, Rather)

I didn’t include government benefits in that budget, but if I had things would have worked out quite a bit better. Between Section 8 housing, tax refunds, food stamps, health coverage from Pennsylvania, and utility assistance programs I think we could live at pretty much the same standard we currently enjoy. (Except for the housing part…that would likely be a major decline.)

These benefits would probably comprise at least 25-40% of our budget in this scenario. At that rate, we could probably afford cell phones, an Internet connection, auto insurance at our current coverage, our normal household and personal spending, my student loans, and even some entertainment. Or we could choose to save that money, invest in ourselves (to increase our income), or give to people in more need than ourselves.

Possible But Not Enjoyable

I’m not making light of this scenario. I’m certain it would still be stressful and emotionally draining, but it wouldn’t be impossible to live this way. (Though I’m having difficulty convincing Michelle of this. :))

I think the reason I can say this is because Michelle and I are pretty content. We don’t have to have the latest gadgets or fashions. We are naturally frugal people who don’t enjoy spending tons of money. We have low-key hobbies, can entertain ourselves, and know how to cook. We’re also disciplined enough to say no to ourselves on the non-essentials. All these factors combine to make it easier for us to live on less than most people in America. (I don’t say this to boast but to simply point out facts. Many people get sucked into the culture and go with the flow without question. Neither Michelle nor I have ever been ones to follow the crowd.)

I’m thankful we’re in a situation where we don’t have to make these choices. God has blessed us with all that we need and then some. But I struggled with creating a sample budget for this scenario, and I now have a slight understanding some of the choices people are forced to make when they’re living on so little. I say slight understanding because I don’t think you can truly comprehend what it’s like to live on that kind of income until you’ve done it.

Your Thoughts

Do you think you could live at the federal poverty level? What would have to change for you? What would you have to give up? Share your thoughts in the comments below!